Here’s how a soft landing for the economy could affect your portfolio

Morsa Images | E+ | Getty Images

More from FA Playbook:

Here’s a look at other stories impacting the financial advisor business.

“The fact that we may see a soft landing or avoid a recession altogether doesn’t mean people should change their strategy of building up a safety net and hopefully recession-proofing their portfolio,” added Glassman, who is also a member of CNBC’s Financial Advisor Council.

‘Investors are finally getting paid to wait’

We’re now getting paid to have money on the sidelines.

Barry Glassman

Founder and president of Glassman Wealth Services

Whether you’re a saver or simply a more conservative investor, “it’s an amazing time to set money aside,” he said. “Investors are finally getting paid to wait.”

Increase bond allocations before interest rate cuts

As the Federal Reserve weighs an end to its rate-hiking cycle, some advisors are adjusting their clients’ bond allocations. 

With expectations of future interest rate cuts, Atlanta-based CFP Ted Jenkin, founder of oXYGen Financial, has started shifting more money into bonds.  

Typically, market interest rates and bond values move in opposite directions. That means bond values will rise in 2024 if the Fed cuts interest rates.

With possible interest cuts on the horizon, bonds are poised for a stronger performance, according to Jenkin, who is also a member of CNBC’s FA Council.

“We believe them to be in favor for 2024,” he said.

Consider extending bond duration

However, with future rate cuts expected, they’ve shifted duration back to intermediate-term allocations, said Boneparth, a member of CNBC’s FA Council.

Jenkin also has started “chipping back in the other direction” with bond duration. “If there’s any cut in interest rates by the Fed next year, those long-term bonds should be even more favored in terms of their overall rate of return,” he said.

Leave a Reply

Your email address will not be published. Required fields are marked *